Proper allocation of demand results in improved efficiency and higher profits. The volume of many businesses are often affected by time periods, wherein large volumes of business are conducted during one time period, known as a peak-time, while smaller volumes of business are conducted during other time periods, off-peak time. For example, a grocery store usually enjoys the highest volume of business between 5-8 pm on weekdays, and the weekend. However, other time periods are usually marked with very little business.
The foregoing fluctuations in business volume are often accommodated by the commitment of fewer resources during the off-peak times. For example, the grocery store may employ a smaller staff during the off-peak hours. Alternatively, the business can increase volume by reduction of prices, thereby increasing demand during off-peak hours. Examples of the foregoing include, happy hours, red-eye flights, off-peak transit fares, and matinee shows, to name a few.
The foregoing price reductions are planned and marketed prior to the off-peak times. The determination of the off-peak time as well as the amount of the price reduction are based on estimated future volumes of business. The estimate of future volume often relies on past data during similar time periods, as well as analyzed trends. However, such estimates do not always accurately reflect actual business volume. Accordingly, the inaccurate estimation of business volume can either cause loss of business, or excessive costs.
Additionally, the impact of price reductions must also be determined. For example, a business may accurately predict a volume downturn during a particular period and decide to reduce prices to increase the volume. However, the business must also estimate the additional volume brought on due to the price reduction. Inaccurate estimation of the change in business volume may also result in excessive costs, or in lost profits.
Inaccuracies in estimations can occur for a number of reasons. Variations can occur due to new trends which are not easily detected. Additionally, statistical variances are common in the use of past samples to determine the outcome of future activity. Therefore, absolute accuracy in the estimation of future business volume is not always possible.
Accordingly, it would be advantageous if business volume could be allocated on real-time basis.